Viral Marketing

Grow your business by engaging your customers

Grow your business by engaging your customers

Do you feel like you have the “pedal to the metal,” spending all you can on advertising but still can’t get the growth of your business into the fast lane? The fact is, if your customers aren’t engaged, it may not matter how much you spend on advertising. Just like a car in neutral isn’t going anywhere (no matter how much gas you give it) until the transmission is engaged, your business isn’t going anywhere until your customers are engaged.

What does engage mean? Here are three definitions you might find in a dictionary:

  1. To attract someone’s attention
  2. To establish a meaningful contact
  3. To move into position so as to come into operation

Combine the three of them and it provides a pretty good working definition for engaging your customers:

Attract your customers’ attention with the intent to establish a meaningful relationship and move them into position to help your business grow.

Without worrying too much right now about how to engage your customers (we’ll get to that) let me propose multiple levels of possible customer engagement as represented by the pyramid model above.

At the base of the pyramid is your total available market. That is, all of the potential customers in the world. They have potential, but at least at this point no level of engagement with you or your company.

The next level derives its name from a term we have all used when asked by a sales man if we need help, “No, just looking.” The fact that we are looking means we are more engaged than the masses, but we’ve yet to make any great commitment.

Just beyond Just Looking is Just Buying. For most companies this is the height of their ambition. Get a sale, book the profit and move on to the next customer.

Above just buying is buying again. This is a level that in general assumes that the customer was pleased enough with their first purchase to be willing to come back and purchase again. I say in general, because it is possible that they have no other options and therefore they have no choice. For you as the business owner, this is a very good level. Serving a repeat customer costs less because you don’t have to pay to acquire them and they are less expensive to serve in most cases because they are already familiar with you and your operation. The more customers you can get to Buying Again , the more profitable you will be.

But there are customer engagement levels even higher than Buying Again. The first is Giving Feedback. This refers to customers that are willing to invest more of themselves in your company than just their money. They do this by making the effort to tell you how you can improve your offerings. In effect, they go beyond the typical definition of customers and become co-producers, helping to ensure that your offering is exactly what the market wants and needs. Two great things happen in the process: 1) As your offering improves so will your sales and, 2) As the customer invests their ideas in your company they will become even more loyal and move to the next level.

At the top of the pyramid is Telling Others. At this level your customers are so pleased with your offerings they can’t be stopped from telling others. They become co-promoters, a very powerful sales force willing to tell perfect strangers and best friends how wonderful your company is. As consumers in general become ever more jaded and less trusting of traditional advertising, the growth of your company will be largely dependent on how many of your customers become promoters.

Having described the model, let me hasten to add that I know it is oversimplified. Not all customers will move through each level. Some will become promoters without ever providing feedback. Some will provide feedback and then go away and never return. Despite its simplicity, I believe the model can be helpful in understanding the concept that customers can become much more valuable to a business than just the value of the purchases that they make. Consider the following:

This chart attempts to show in relative terms how much a business benefits financially from a customer at each level of possible engagement. At the far left, Just Looking, expenses associated with a customer typically exceed income from that customer. For example, you spend money on advertising and attract the attention of a customer willing to take a look. At that point you have paid out (for advertising) more money than you have brought in ($0 purchased by the customer).

For those customers that take the step and buy your offering, chances are you will cross over into positive returns. If the customer returns to buy again and again your profit from that customer will increase. Note that the slope of the line becomes steeper in the buying again phase. That is due to the fact that it is less expensive to sell to returning customers than it is acquire new customers. In fact for most businesses it costs five to ten times more to acquire a new customer than it does to sell more to current customers. The obvious difference is the acquisition cost associated with attracting new customers. The less obvious reason is that a regular customer already knows how your product or service works and doesn’t require as much “hand holding” throughout the process.

As the curve continues into the higher levels of engagement, Giving Feedback and Telling others, its slope becomes even steeper indicating that significantly higher returns are possible. Two reasons for this: 1) The additional costs required to move customers into these levels is relatively small and 2) The potential returns have a built in multiplier effect—that is, one customer’s actions can influence many other customers.

For example, feedback from one customer that helps you improve your offering not only benefits that one customer and brings them back again but benefits all your customers and increases the likelihood that they will return more often. Even more obvious, a customer who begins telling others about your business brings not only her purchases but the purchases of several new customers to your business.

In conclusion, engaged customers will help you improve your offering, they’ll actively promote your product, they will improve your bottom line, and, to a large extent, they will determine how fast your business will grow. As you consider the growth of your business, look not only at how many “Just Looking” customers you can bring in and move to “Just Buying,” but also consider how you can get your “Just Buying” customers fully engaged in your business.

Get customer feedback, generate referrals, and increase repeat sales for as little as $150 a month. Learn more

Referrals: The Holy Grail for small businesses

Referrals: The Holy Grail for small businesses

I was out Christmas shopping with my wife last week. We were at BestBuy looking for video games for our teenage sons. My wife asked the clerk for his opinion on the best game for teenage boys. He ran through several. He did a good job, but none of the descriptions were compelling enough to make me want to pick one up. As he and my wife went on talking, a fellow shopper came up beside me and said, “Hey, if you want a good game for teenagers, get this one.” I was immediately sold. I had never seen him before and probably will never see him again, but he had instant credibility because I knew he had no reason to give me his opinion other than that he really liked that game.

Referrals are powerful even if they come from a person you have never met before. Need more evidence? Anita Campbell of Small Business Trends has just released the results of her recent survey about selling to the small business market.

The survey established that a whopping 83% of vendors attract small business customers through referrals — more than twice the number that report getting customers through cold calling, direct mail and other traditional techniques.

You can see the full results of the survey here.

Business-to-consumer or business-to-business, there is no more powerful way to attract business than referrals. Don’t leave it to chance. Give them some good reasons to talk about you and then put a megaphone in their hand.

Find your happy customers and put a megaphone in their hand. Learn more

The Only Way to Grow a Business

The Only Way to Grow a Business

According to Andy Taylor, CEO of Enterprise Rent-A-Car,

The only way to grow a business is to get customers to come back for more and tell their friends.

He seems to know what he is talking about. A recent Enterprise press release notes that they are the largest car rental company in North America and the fastest growing rental company in the airport segment. They also happen to be number 16 on Forbes list of largest privately held companies.

What is their secret? This is what Taylor says: “Our success in growing our airport business can be attributed directly to the highly personalized brand of customer service that we extend to each renter.” Just words? Apparently not. Over the last four months Enterprise was ranked #1 by Market Metrix for customer satisfaction in the car rental industry and JD Powers ranked them highest in customer satisfaction among airport car rentals.

I hope it is obvious that it is not just a coincidence that Enterprise keeps their customers happy and they have been growing like crazy. Happy customers come back and they tell their friends about their experience. So how happy are your customers and do you know how to find out?

That is the question that Fred Reichheld (author of Loyalty Rules) and his team at Bain Consulting set out to answer. Is there one “customer satisfaction” type question that explains or can predict growth for a company? You can listen to a summary of their findings here.

What they found is that there is one question that has a very high correlation to growth across most industries. The question is:

“How likely is it that you would recommend us to a friend?”

Makes sense, doesn’t it? If your customer is willing to put their reputation on the line for you they must have had a pretty good experience. So that should be the goal: give every customer an experience so great that they would be willing to recommend your business to their friends.

Now the question becomes, “how do you measure that?” There are probably lots of ways to do it, my bias is that Promoterz™ is probably the quickest and easiest way to implement a measuring process. The Promoterz™ feedback survey is built around the “recommend us to a friend” question. It also automatically calculates the net promoter score that Reichheld and his team developed to predict company growth.

However you decide to measure and manage customer loyalty, don’t think of it as a “one time” event or a seasonal activity. Andy Taylor, CEO of Enterprise Rent-A-Car can rank order his 5,000+ facilities based on customer scores every week. He also ties the compensation of his employees to those scores. It is an integral part of his organization’s operating metrics. If you are serious about growth, it should be a key part of yours as well.

Promoterz is the hands-free, word-of-mouth marketing service that takes care of the details so you can focus on business. Learn more

"Dude, You Gotta Try This"

"Dude, You Gotta Try This"

Is there anything more powerful than a referral from a friend? Money can’t buy the credibility that a friend, or even an acquaintance, commands. The recommendation above was actually emailed from a happy Sport Clips™ customer to his friend along with a coupon for $3 off. This is just one of many referrals sent by the customers of Joan & Chuck Matheny.

The Matheny’s own two Sport Clips™ franchises. Sport Clips™ features an atmosphere where men and boys feel comfortable getting their hair cut. Every chair has a television tuned to a sporting event, there is a sports theme throughout, and their premier service is the MVP. The MVP includes a shampoo, a neck massage, and a hot towel--dude you gotta try it!

In September 2005, Chuck was looking for a way to communicate with his customers without having to buy expensive ads. He also wanted to improve 1st Time customer retention. He decided to give Promoterz™ a try in one of his locations to see if it would help. He’s been so pleased with the results, his second store is now using the system as well. You can read the details of the Matheny’s experience here.

I’m obviously biased, I think Promoterz™ is a simple and inexpensive way to generate referrals and I hope every business owner signs up. Having said that, it is certainly not the only way to encourage your customers to tell their friends about your business. Mity Lite, maker of world famous lightweight and durable folding tables, credits 40% of their sales to the fact that their sales reps always, always ask “Who else do you know that would appreciate the quality of our products?”

Another company that attributes a large portion of their sales to referrals is Bike Friday. Here is a description of their referral program from CMO (http://www.cmomagazine.com/read/100105/power_one.html):

The company also uses a referral awards program. Customers receive a set of 12 prepaid postage cards with their name and that of the Bike Friday expert who sold them their bike. Whenever a customer meets someone whose interest is piqued by his bike, he'll fill out a card and drop it in the mail. Bike Friday then mails information to the contact. It also captures this interaction in its database so that riders who make a referral receive a bonus if their prospect purchases a bike. Customers can choose either a $50 check or $75 credit toward future products. Day accumulated enough referral credits to purchase a $2,000 bike last year.The referral program has helped the company acquire more than a third of its 10,000 customers; it also helps drive sales. Over the last three and a half years, the program has generated $1.3 million in sales. In 2004, 29 percent of its sales came from referrals.

Customer referrals work and as the advertising chaos continues to increase, they will become more and more powerful. If you are not already doing it, spend some time thinking about how you can make it easier for your customers to tell their friends about your business. It will be worth the effort.

Customers who feel that you are listening to them are more likely to recommend you to a friend. How do your customers know that you are listening? Learn more
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